Grofers eyes SoftBank, Tencent big bucks after turnaround

MUMBAI: The SoftBank-backed online grocery retailer Grofers is looking to capitalise on its turnaround story as it steps into fund-raising mode more than two years since its back-to-back financing rounds, people close to the matter said. With monthly gross sales likely to touch Rs 100 crore (including cashbacks and discounts)in January, the Gurgaon-based e-grocer has begun talks with existing investor SoftBank and Chinese internet giant Tencent for a possible capital infusion of up to Rs 800 crore, sources told TOI.

While the discussions with Tencent are early, SoftBank is likely to bulk up its shareholding in Grofers, valuing the company at 20-30% lower than the $400-million valuation it fetched in 2015.

Grofers competes with BigBasket, which recently got on board Alibaba and Paytm Mall in a new $200-million funding after many months of being engaged in talks.

SoftBank’s interest in pumping fresh money into Grofers in what is possibly a down round — where a company raises capital at a lower valuation compared to its previous round — comes after it explored raising strategic capital from Amazon. Grofers was also in talks for a possible merger with Big Basket last year, which ended pre-maturely. There has also been speculation of Flipkart acquiring Grofers, as both have common investors in SoftBank and Tiger Global, which collectively hold more than 40% in the e-grocer. Venture fund Sequoia Capital is its earliest institutional backer.

An investor privy to Grofers’ financials said, “After a very tough 2016, Grofers is closing in on Big Basket on the next-day delivery front as they have exited the express delivery format (see graphic).” Big Basket is expected to be clocking around Rs 120 crore in monthly sales, inclusive of about 30% in express deliveries.

An email sent to spokespersons at SoftBank and Tencent did not elicit a response.

While Albinder Dhindsa, co-founder & CEO, Grofers, did not comment on its fund-raising plans, he said Grofers has grown four times since February 2017 and doubled since July. “We are the dominant player in the north where we have an 80% market share in online grocery. We were able to do this while moving completely out of the express business and focusing only on next-day delivery, a segment in which we are the largest online grocery nationwide now.”